AlexWhite.org » ETS

Alan Kohler shows he doesn't know about politics

admin — Wed, 03 Feb 2010 21:14:41 +0000

Alan Kohler, of Business Spectator fame, wrote yesterday in Crikey:

Against all expectations, Tony Abbott and Greg Hunt have actually come up with a clever climate change policy, and certainly one that will change the debate in Australia.

Prime Minister Kevin Rudd will now have to quickly do a deal with the Greens to get a government scheme through parliament, or else simply give up and blame everyone else.

With the failure at Copenhagen having pulled the rug out from under him, and a global agreement on emissions trading now impossible this year, Kevin Rudd must avoid a 2010 election on his current CPRS at all costs. To do that by dealing with the Greens now would mean a two-year carbon tax eventually turning into an emissions trading scheme â€“ a big risk.

(My emphasis.)

Unfortunately, this kind of commentary is completely misleading, unhelpful and uninformed. For a business analyst, it shows a concerning naivete in the political process and the dynamics of the Australian Senate.

For the record, the Labor Government needs seven (that’s seven) additional votes in the Senate to pass legislation.

Seven votes.

The Greens Party has five (that’s five) votes in the Senate.

There are two (that’s two) cross-bench, independent senators, Senator Xenophon and Senator Fielding.

To pass any legislation through the Senate, Labor needs both (that’s both) cross-bench Senators and all (that’s all) of the Greens Party Senators.

There is simply no possible way for a “deal with the Greens” to deliver a carbon tax or anything else. A “deal with the Greens” would deliver an extra five (that’s five) votes in the Senate, falling two (that’s two) short of a majority. Even if Senator Xenophon voted with Labor and the Greens Party, Senator Fielding is an avowed climate denier (and so wouldn’t vote for a carbon tax or an emissions trading scheme).

“Dealing with the Greens” would not deliver a two-year carbon tax. It would deliver precisely nothing at all.

Explaining cap and trade

admin — Tue, 22 Dec 2009 22:21:33 +0000

An interesting little video from the creators of the Story of Stuff, this has an explanation of how “cap and trade” (emissions trading) works, and the major pitfalls with the system.

Unfortunately, the video is one of those preachy, moralising videos that is full of criticisms but no solutions. The closest it comes is proposing a “simple carbon tax”, without recognising that a carbon tax has as many policy hurdles as carbon trading (just look at tax avoidance and minimisation by big companies as it stands).

Media beat up, part I

admin — Tue, 08 Dec 2009 11:10:00 +0000

I recently had a debate with a friend about new media versus old media. One of the points I made was that journalists at major newspapers and TV stations are just as likely as PR spin doctors and politicians to be pushing a line. Furthermore, I argued that journalists “beat up” stories to get copy into the paper, emphasising minor differences and turning them into major divisions.

This was on show during the recent Federal Liberal Party leadership crisis and the dumping of Nathan Rees as NSW premier. The Press Gallery in Canberra was willingly a part of the Minchin/Abetz machine that ruthlessly white-anted Turnbull. What was even more telling was that the “insider” journalists were often no more informed than observers on Twitter.

A case in point that is particularly close to my heart at the moment is a recent story in The Australian: Union revolts over ETS.

The story is about the union I work for, the NTEU, which at its recent National Council, passed a motion calling for a minimum 40% cuts to carbon emissions in Australia, and for the “abandonment” of the CPRS. The motion ends announcing that the NTEU will work with the ACTU and others to promote this position. There is a separate motion that says the NTEU will work with the ACTU and ACF’s Climate Connector campaign.

Somehow, this simple motion (which was passed in early November without comment by the media) has turned into “breaking ranks” with the ACTU.

Now, perhaps I’ve got rosy-coloured glasses on, but my understanding was that the ACTU didn’t support the Carbon Pollution Reduction Scheme, but rather saw it (like the Fair Work Act) as the “only option on the table” and thus better than nothing.

â€œThe settlement between the Rudd Government and the opposition has sadly been driven by business self-interest in many areas, however the basic architecture to drive carbon abatement remains intact,â€ said ACTU President Sharan Burrow.

Now, of course, the NTEU has proposed development of carbon pollution reduction policies that do not “primarily rely on market mechanisms”. This does seem to me to be “breaking ranks” or a “revolt”.

It does however come at a time when the Rudd Government is being heavily criticised by the Opposition over its CPRS. It comes at a time when emissions trading has been put under sustained pressure and attack by climate change denialists.

The Australian is an avowed “campaigning” newspaper. The article’s author, Ewin Hannan has long experience (at The Age and then The Australian) covering politics and industrial relations. I can only assume he gets the ACTU media releases. I can only assume he read the NTEU’s policy motion. I can only assume he has an understanding of how unions, union conferences, and union policy motions work.

I cannot see how the NTEU’s motion turns into a “revolt”. Except of course, if there was a “line” being pushed.

Willful ignorance or straw man

admin — Tue, 03 Mar 2009 02:29:16 +0000

Alex Robson from Concept Economics has not bothered to read the Australia Institute paper into the CPRS emissions floor (pdf link). Amazingly, his uninformed and un-researched tirade against environmentalists was published in The Australian today.

Mr Robson writes:

Clearly, if the number of permits in circulation could never fall, then the Australia Institute view would be correct: if a business or individual were to reduce their emissions then the demand for permits would be lower than it otherwise would be, and commensurate number of permits would be freed up in the system for useelsewhere.

Hence the conclusion follows that there would be nothing that any individual or business could do to reduce aggregate emissions.

The logical flaw here is the assumption that the number of permits in circulation must be fixed and could not fall. This assumption is incorrect.

Under an ETS there is always another option for citizens who are concerned about climate change: the “buy and hoard” method of emissions reductions.

If individuals, families, businesses, or lobby groups such as the Australia Institute want aggregate emissions to fall below the Rudd Government’s target, they can contribute to this goal very easily: go into the market, buy permits, and permanently remove them from circulation by either hoarding them or destroying them.

Remember, cap and trade makes it illegal for a business to emit without a permit. By permanently removing permits from circulation, the buy-and-hoard method reduces the ability of businesses to emit: no ifs, ands or buts. Aggregate emissions would be lowered by the number of permits hoarded or destroyed, full stop.

In other words, as a simple matter of fact and logic, the argument that an ETS puts a lower bound on emissions cannot be sustained.

Robson’s diatribe heats up towards the end of his article:

Instead of going into the political marketplace and spending endless hours lobbying, why don’t green lobby groups form permit superfunds and buy permits from our largest emitters?

…

And therein lies the rub: deep down, climate zealots have always preferred government action and regulation to market-based alternatives and the voluntary exchange of permits for cash.

Many activists cannot accept the proposition that instead of lobbying and using political influence to get what they want, they might actually have to cough up the dough and put themselves at the mercy of market forces to achieve their aims.

They would rather compel the community as a whole to bear all the costs than to reduce their own lobbying output. The last thing they want to do is to go out into the market and try to persuade business to reduce emissions by paying them to do so, even though that is the logical and most straightforward way of reducing emissions under an ETS.

Of course, if he had bothered to read the Australian Institute paper, he would see that the scenario he presents as manifestly logical and foolishly overlooked by TAI, is, infact, presented by the Australia Institute (page 2)

Buy carbon permits directly and then rip them up. Because it is illegal for the top 1000 polluters to emit more greenhouse gases than the permits they have purchased allow, the only way to reduce Australiaâ€™s overall greenhouse gas emissions is to remove carbon permits from the system. There will then be fewer permits available to polluters, who will need to pay a higher price for the right to pollute. Carbon emissions will experience a net decline as a result.

Incredible.

Alex Robson is a senior economist for Concept Economics, but clearly the concept of actually reading the article you are criticising is a novel one.

As a side note, Alex Robson does not appear on the Concept Economics website as a senior economist.

UPDATE

Larvatus Prodeo on Alex Robson‘s previous forays into the climate change debate.

We need strong action on emissions trading

admin — Sat, 15 Nov 2008 23:32:34 +0000

The Garnaut report released earlier this year made the case for a robust emissions trading scheme. If Australia is to combat climate change, Federal Labor needs to take immediate action to reduce the amount of carbon put into the atmosphere.

As activists, we have a duty to lobby senior Ministers in parliament to do everything they can to urgently implement an effective emissions trading system. After all, it is our generation that will need to deal with the problems that are not addressed today.

Without strong action now, by 2050 – in our lifetime – we may face an even more serious economic and environmental crisis than the one we face now. Our standard of living will inevitably decrease, our food supplies will be threatened and our environment will be devastated.

Big business and climate change skeptics inevitably complain that introducing a strong emissions trading scheme will damage our economy. The Stern Report and now the Garnaut Report put those concerns to rest. To do nothing would do more damage than an ETS ever could.

For Australia to take early action now would put as in a better position down the track, as larger polluters are forced to transition to a carbon constrained economy. If we are early adopters and developers of carbon reducing technology, we will be able to export our expertise. New climate-friendly industries – already a massive growth area in the US and Europe – will be opened to Australian investment.

Federal Labor must not waiver from their duty to the future. Kevin Rudd promised long-term thinking. We need Rudd and Climate Change Minister Penny Wong to stand up to the self-interest of big business and the climate change skeptics in the Opposition.

Web: Garnaut Review

Labor needs a strong stand on emissions trading

admin — Mon, 01 Sep 2008 12:59:01 +0000

Federal Labor needs to take a strong stand on emissions trading.

After the Garnaut Report and the Green Paper, it appears that Federal Labor may not make the Australian emissions trading scheme as robust as it needs to be to ensure that damaging climate change is mitigated.

An emissions trading scheme (ETS) is essential for Australia’s long term environmental and economic future.

A strong ETS with a high price on carbon is crucial. Introducing a cap in emissions creates scarcity; market forces then forces the price up. We need a cap that strongly restricts carbon pollution.

Victoria is well placed to take advantage of a strong ETS. Although we have enormous infrastructure that pollutes heavily, Victoria also has abundant natural resources. And we already have a number of emerging players in renewable technologies.

By setting a high cap, the Federal Government can ensure that market forces ensure that new technologies, particularly renewable energy and carbon capture and sequestration, have an opportunity to compete against lower-cost polluting energy and industries.